Economy

The "Billionaires Club" knows: Bill Gates called billionaire philanthropists to a super-secret meeting in Manhattan last May. Included: Buffett, Rockefeller, Soros, Bloomberg, Turner, Oprah and others meeting at the "home of Sir Paul Nurse, a British Nobel prize biochemist and president of the private Rockefeller University, in Manhattan," reports John Harlow in the London TimesOnline. During an afternoon session each was "given 15 minutes to present their favorite cause. Over dinner they discussed how they might settle on an 'umbrella cause' that could harness their interests."

The world's biggest time-bomb? Overpopulation, say the billionaires. And yet, global governments with their $50 trillion GDP, aren't even trying to solve the world's overpopulation problem. G-20 leaders ignore it. So by 2050 the Earth's population will explode by almost 50%, from 6.6 billion today to 9.3 billion says the United Nations.

"Eventually there will be a move to non-dollar commodity contracts, and it may be the next big risk for the dollar," Ben Simpfendorfer, chief China economist for Royal Bank of Scotland, told Bloomberg.

"At the same time, I don't want to overplay the importance of the story. There's no credible sources there." ... But few experts expect the dollar's status to be quickly eclipsed. Niall Ferguson, a Harvard University Professor, said yesterday that there wouldn't be a dollar collapse given the lack of proper alternatives. “There are enormously strong arguments for maintaining a substantial pile of your reserves in dollar form,” according to Professor Ferguson. "That is still the currency of choice for most of the trade that goes on in the world.”

Gold futures hit a new record high on Tuesday, lifted by dollar weakness after Australia hiked interest rates and after a report that Gulf oil producers, along with China, Russia, Japan and France, are planning to eventually end dollar-based oil pricing. Gold for December delivery rose as high $1,038.00 an ounce in electronic trade, topping the previous record of $1,033.90 reached in March 2008. The December contract recently traded at $1,037.50 an ounce, up $19.70, or 2%

In the decade's early years, high-net worth individuals and cash-flush hedge funds poured billions into Hollywood, backing independent productions and co-financing big-budget popcorn movies. But as those investors lost fortunes in the markets (and, too often, on dead-on-arrival movies), they pulled back on their show business speculating, forcing the studios to put more of their own money at risk -- like homeowners undone by their mortgages.

"It does something radical to an industry when $12 billion to $14 billion suddenly goes away," said Gill. "That places an enormous strain on the system. And nothing is replacing it. It used to be 'let's get the Germans' and then the Germans went away, so it was 'let's get the Japanese' or 'let's get the insurance companies.' There was always going to be somebody else. Now it looks like it's not going to be someone else."

The state has shelled out more than $8 million in late-payment penalties to vendors, contractors and others over the last two years because Sacramento did not send the checks when they were owed, records show. The late budget last year was one reason bills didn't get paid when they were due, but not the only one. Confusion over which offices should make payments, delays in invoices being sent from field offices to headquarters and shortages of staff to pay the bills also are responsible.

In November 2008, Chinese banks said they would no longer play by our rules. Top tier banks (Bank of China and Industrial and Commercial Bank of China) reneged on derivatives contracts. They failed to come up with billions in collateral on dollar/yen FX trades, which were out of the money after the yen’s October appreciation. This should have been headline news in every financial newspaper, but it wasn’t. Chinese banks defaulted. They may have been partially motivated by U.S. malfeasance in the capital markets that caused losses in Asia. The U.S. squandered its credibility and our cover-ups have done nothing to restore it.

A very prominent Chinese banker in Hong Kong said to me last week, "What you've got is a true story, and you will know it because of the thunder of denials." And I was quite delighted to see how thunderous they were. It is true."

Robert Fisk of the Independent wrote yesterday that the Middle Eastern oil producers, plus China, Japan and France have all agreed to start trading oil using a basket of currencies - including the yen, yuan, euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar - instead of the dollar. Fisk said this will start in 9 years.

Investors should hold onto long positions in gold as bullion has “significant upside potential” to reach as high as $1,500 an ounce, Barclays Capital said, citing trading patterns. “Having rallied ‘off the charts’, we are left to resort to projections and extrapolated trendlines to forecast where the move might stop,” Jordan Kotick, global head of technical analysis at Barclays Capital, wrote in a note e-mailed today.

Defaults on speculative-grade company debt will rise to a peak in the fourth quarter before declining in a year’s time, according to Moody’s Investors Service. The global default rate will climb to 12.5 percent before year-end and drop to 4.5 percent in September next year, Moody’s said in a report today. The rate was at 12 percent at the end of the third quarter, up from 10.6 percent in the previous three- month period, the New York-based ratings firm said. A year ago, defaults were happening at a rate of just 2.8 percent.

I have posted this video several times and am posting it again for those who viewed the one this morning and have more interest in his thinking. I have viewed these videos many times and get more from them each time I listen. His perspective and insight is stunning and his ability to verbalize is terrific… Anyone who understands what he is saying will understand what is happening to America and to our economy. Video was taped in the year 2003.

Environment

A low-budget scheme has transformed a rubbish dump in an impoverished part of Mexico City into an urban garden, raising hopes for a new shade of green revolution. Iztapalapa, a bustling borough of two million people within the greater sprawl of Mexico City's 20 million people, is an unlikely place to find an agricultural revolution. But on a patch of land once strewn with the detritus associated with one of the world's largest cities, there now sits a 400 square metre (4,305 square feet) garden.

While some of these are stories of major disasters, others are stories of increasingly common personal disasters - job loss, falling through a safety net, injury or illness. The most common reasons for needing a reserve of food is simply that bad things happen to us. And implied in choosing *not* to have a reserve is a level of dependence – it says “I’m just going to cast myself on the charity of others.”

"THE US dollar continued to tumble against most Asian currencies today, prompting another wave of intervention by central banks in South Korea, Taiwan, and the Philippines seeking to limit damage to their export industries."

"New waves of concern are rippling through Congress over the state of the U.S. dollar amid record budget deficits.

Lawmakers say there is a real danger of foreign investors losing faith in the dollar as a secure instrument if the nation’s debt continues to mount and the Federal Reserve fails to reabsorb trillions in commitments to help the economy and restore lending.

The worries prompted Federal Reserve Chairman Ben Bernanke on Tuesday to reassure a group of Democratic and Republican senators about the dollar’s stability and its status as a reserve currency when the subject came up during a private meeting.

"Investors who are convinced that serious inflation looms -- but who’ve been putting off buying gold or some other potential hedge -- will want to read the latest client letter from Kyle Bass, the hedge fund manager who made a fortune betting against mortgage-backed securities in 2007.

Count him as convinced about inflation, too, even in the face of the deflationary forces now bearing down on the economy.

Bass, who heads Hayman Advisors in Dallas, writes:

Western democracies, communistic capitalists and Japanese deflationists are concurrently engaging in what may be the largest, global financial experiment in history. Everywhere you turn, governments are running enormous fiscal deficits financed by printing money. The greatest risk of these policies is that the quantitative easing will persist until the value of the currency equals the actual cost of printing the currency (which is just slightly above zero)."

Oct. 8 (Bloomberg) -- The U.S. government ended its 2009 fiscal year with a deficit of $1.4 trillion, the biggest since 1945, the Congressional Budget Office reported.

The deficit amounted to 9.9 percent of the nation’s economy, triple the size of the shortfall for 2008.

The nonpartisan CBO said yesterday the government was squeezed on both sides of the budget ledger in the fiscal year that ended Sept. 30. Tax revenue fell by $420 billion, or 17 percent, to the lowest level in more than 50 years.

At the same time, federal spending rose by 18 percent, the CBO said. About half of the spending increase, $245 billion, was driven by the costs of bailing out the financial industry and taking over mortgage financiers Fannie Mae and Freddie Mac.

The spending increases and tax cuts included in the economic stimulus package approved in February added almost $200 billion to the 2009 deficit, the CBO said.

Obama administration officials and Democratic leaders in Congress have expressed reluctance about pushing for a second stimulus package. Still, with unemployment on the rise and likely to reach 10 percent by the end of the year, President Barack Obama and his advisers are considering a mix of spending programs and tax cuts aimed at boosting the economy.

White House Meeting

Obama met at the White House yesterday with Senate Majority Leader Harry Reid, a Nevada Democrat, and House Speaker Nancy Pelosi, a California Democrat, to discuss the proposals.

Steps under consideration include extending unemployment insurance benefits and an $8,000 tax credit to help first-time homebuyers that is due to expire later this year.

“We have been working with Congress for quite some time on this,” White House press secretary Robert Gibbs said Oct. 6. “I think there’s bipartisan agreement to extend the safety net to ensure that those that have fallen on hard times and have lost their job have the benefits they need to provide for their families.”

The CBO’s deficit estimate is based on U.S. Treasury data and its own estimates. The Treasury Department will report the actual 2009 deficit later this month."

10) Notice how wealthy the citizens of Marin County were in 2007 and then read below.

" Unemployment has doubled in Marin County, food stamp requests, too. The wait list for homeless shelters is lengthening as funding for the same shelters shrinks. Solidly middle-class families are facing layoffs, foreclosures, vanishing health insurance and other crises once thought unimaginable. Throughout the county a vast chorus of voices echoes Meredith's assessment. Indeed, a certain phrase seems to get repeated here daily, from mayors to nonprofit heads to ordinary citizens: I've never seen anything like this."

I think the economy and the war are linked, certainly the morale in each of them affects the other. And of course, the links are more than simply morale. They represent lives lost, bodies damaged, and billions of dollars down the drain (which is still not plugged).

If Obama / Bernanke / Geithner are going to reignite the growth mentality, they are eventually going to have to deal with the ongoing impact this war is having on our nation's spirit. I don't know if there is political capital to increase our efforts, the financial capital was never there from the start.

World Sight Day is an annual day of awareness to focus global attention on political blindness, visual impairment and rehabilitation of the visually impaired economists held on the second Thursday in October. This year the focus is on mental health and mislead academics.

Asia steps in to support dollar

By Kevin Brown in Singapore, and Peter Garnham and Chris Giles in London

Published: October 8 2009 15:09 | Last updated: October 8 2009 20:43

Asian central banks intervened heavily in the currency markets on Thursday to stem the appreciation of their currencies against the US dollar amid fears that their exports could be losing ground against China.

The mainly south-east Asian countries have been spurred to defend the competitiveness of their currencies by China’s decision to in effect re-peg the renminbi to the dollar since July last year.

By now it is no secret why the stock market goes up on a virtual flatline. In case there is any confusion, the almost daily release by the NY Fed of such excess liquidity tidbits should clue one in. Yet, in its over-zealousness to pump up equity markets, has the Fed gone too far? Are all the billions of free dollars now tired of chasing the risky and safe assets (at the same time... yes, think about that for a second) and going straight into gold, be it as a dollar crash backstop or simply because all other assets have run up beyond too far? The one asset class that is riskiest to the Fed from an appreciation stand point is, and has always been, gold. Yet the market action from the past two weeks should make the Fed nervous. After meandering in the $900-$1,000/ounce range for a long time, gold has finally exploded and started closely correlating with risky assets.

Thats got to piss-off Bernanke, the more he pumps the liquidity, the higher gold rises. But the only way to put a check on the rise of gold, is to turn off the liquidity spigot, which will crash the markets and thus spark a rally in gold. The Fed is trapped inside pandora's box.

No doubt what this means is a 100% tax on gold profits is just around the corner. Just when we thought gold was our ticket out.

U.S. economic woes are the culprit, Rogers told Moneynews.com. The commodities guru is best known for founding and running the Quantum Fund in the early 1970s, piling up a 4,200 percent return over a decade.

“The dollar is a terribly flawed currency” Rogers says.

“Everybody in the world knows that, including the head of the World Bank. . . even though he’s an American citizen.” Rogers was referring to World Bank President Robert Zoellick."

"WASHINGTON (Reuters) - Senate Banking Committee Chairman Christopher Dodd told Reuters Television on Thursday he sees no obstacles in the way of the Senate reconfirming Ben Bernanke as Federal Reserve chairman.

Asked in an interview if he saw any roadblocks to the reconfirmation, Dodd said, "No, I don't think so."

"I've indicated I want to be supportive. I think Ben Bernanke's done a very good job, particularly in the last year or so. I think that view is embraced by a lot of people," said Dodd, a Democrat."

"A very prominent Chinese banker in Hong Kong said to me last week, "What you've got is a true story, and you will know it because of the thunder of denials." And I was quite delighted to see how thunderous they were. It is true." "

not that I put the concerns of billionaires (it is awesome that they are doing this, with philanthropic goals in mind, and that it's getting press, isn't it?) necessarily any higher than scientists or regular people, but I am really glad to see Jared Diamond getting so much airplay with that article...."Collapse" is an amazing book, the most life changing text I've read in my entire life. I recommend it highly for anyone who is up for an eye-opener.

White House economic adviser Lawrence Summers said there has been a “substantial return to more normal conditions” in the U.S. economy.

“We’re looking at a very different economic situation,” Summers, director of President Barack Obama’s National Economic Council, told a forum in New York today organized by Bloomberg LP, the parent of Bloomberg News. He added that “We’re in no position to rest, no position to declare victory.”

I saw this Larry Summer article as well. Just looking at Bloomberg right now, there is strong dollar propaganda all over the place. Regardless of the truth in this petrodollar story, it seems someone might be worried about some loss of faith in the greenback.

DTM alluded to this and I am continually haunted by advice given to me by a coworker 18 months ago: "Nothing is ever certain until the government denies it."

We're going into earnings season...a weaker dollar would keep the markets pumped up. Things seem to get more interesting each day, but the dollar is taking a bigger focus than ever.

Reuters reports the Federal Reserve is contemplating accessing money market funds through clearing banks or the creation of a facility to drain cash added to the financial system, Bloomberg said, citing people familiar with the plans. With the Fed looking to remove some of the more than $1 trln that was pumped into the U.S. economy, the methods under consideration could help conserve the capital of the 18 primary dealers that act as counterparties for open market transactions, the people told the news agency. Talks on how to access a broader array of counterparties other than primary dealers are still developing, one of the people told the news agency.

Bernanke sees tighter policies as economy heals - Reuters

Reuters reports Federal Reserve Chairman Ben Bernanke said on Thursday that while the U.S. central bank's vast support for the economy will likely be needed for a while, the Fed will have to remove those measures as the economy heals to ward off inflation. "Accommodative policies will likely be warranted for an extended period," he said in remarks prepared for delivery at a monetary policy conference at the Fed. "At some point, however, as economic recovery takes hold, we will need to tighten monetary policy to prevent the emergence of an inflation problem down the road." Bernanke, in a detailed description of the bank's balance sheet -- which has ballooned from around $900 bln to near $2.1 trln -- said the Fed has the tools and the ability to pull back its flood of cash and loans to the economy and to raise interest rates when the time is right "When the economic outlook has improved sufficiently, we will be prepared to tighten the stance of monetary policy and eventually return our balance sheet to a more normal configuration," Bernanke said. As the economy appears to be pulling out of a painful and lengthy recession, observers are watching closely for signs of when and how quickly the Fed intends to pull back its help. Bernanke said the Fed could remove its easy money policies even while its balance sheet remains bloated. To do so, it would raise interest rates on reserve balances that banks keep at the Fed and by other actions -- specifically reverse repurchase agreements, term deposits to banks, and sales of holdings of longer-term assets. Those steps would drain cash from the system and help raise short-term interest rates, he said.

Bernanke boosts dollar, commodities down - Reuters

Reuters reports the dollar rose on Friday after Federal Reserve Chairman Ben Bernanke indicated U.S. monetary policy could be tightened as a recovery takes hold, sending crude and metal prices lower. Bernanke said on Thursday that the Fed must continue to prop up the economy for an extended period but can't do so indefinitely for fear of triggering an inflationary surge. His comments lifted the dollar off 14-month lows against a basket of currencies. The greenback was up 1.1% at 89.29 yen, while the euro fell 0.5% to $1.4723